ChinaFintech – Alibaba’s Business Credit Arm Totals 10M Borrowers

A cumulative total of 10 million businesses on Alibaba and its affiliated platforms took out loans from its business credit arm in the last five years, the company unveiled it at an event earlier this month. Since 2015 the business has been operated by MyBank (网商银行), the online direct bank in which Ant Financial (Alibaba’s finance arm) has a 30% stake.

Duoshou Duodai (多收多贷), a loan product for small and micro-businesses who use the Alipay QR code payment service to accept payments, has signed up 3 million customers since its launch a year ago this month.

MyBank said they’ve decreased the average loan origination cost to RMB 2.3 (US$0.35), with RMB 2 billed for technology, from some RMB 2000, mainly manual labor cost, with traditional lenders.

MyBank announced to open its near-instant lending technology and other tech capabilities to third-party financial institutions. It aims to sign up some 10 million financial institutions and some 30 million small and micro-business customers in the next three years.

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ChinaFintech – Meituan’s Finance Business

Meituan, the leading platform for local services, recorded RMB1.73 billion and RMB74 million in loan receivables in 2017 and 2016, respectively, according to its IPO filing.

After obtaining a license for small loans in November 2016, Meituan Xiaodai (美团小贷) began to provide businesses on its platform unsecured loans with terms ranging from 6 to 18 months. There were 5.5 million businesses on Meituan platform as of the end of 2017.

The company has also begun extending credit to users. Meituan Shenghuofei (美团生活费), unveiled earlier this year, is a short-term cash loan.

Revenue sources of its loan business include interest income from balance-sheet loans and facilitation fees from loans funded by banks and other financial institutions.

Meituan runs credit screenings using big data techniques and has implemented anti-fraud systems. It also provides guarantee services for certain borrowers to banks and other financial institutions.

Its small loan company took out a one-year term loan from China Merchants Bank in 2017 at an interest rate of 4.785% per annum.

Apart from the loan business, Meituan also owns payment service company Qiandaibao (钱袋宝), which holds a license for non-financial institutions to run online payment services, and a 28.5% stake in Jilin Yilian Bank (吉林亿联银行), a private bank opened in May 2017. The revenue from Qiandaibao since it was acquired by Meituan in August 2016 has been minimal and it has also contributed a minimal loss, according to the Meituan filing.

ChinaFintech – Tencent’s WeBank Totaled 100M Personal Loans as of 2017

WeBank (微众银行), the direct bank affiliated to Tencent, saw the total originations of personal loans surpassed 100 million in 2017 since its incorporation in 2014, according to WeBank 2017 annual report.

It provides Weilidai (微粒贷), a short-term personal loan product available on Tencent’s messaging apps (WeChat and Mobile QQ), and auto financing product Weichedai (微车贷) to individual borrowers. The outstanding loans of Weilidai reached RMB100 billion (US$15 billion) in 2017, according to Tencent Q4 2017 earnings report. For businesses, WeBank launched Weiyedai (微业贷) in 2017.

The total loan originations and the total number of borrowers increased respectively by 170% and 327% to RMB 870 billion (US$133 billion) and 12 million as of the end of 2017.

92% of the loan balances were less than RMB 50,000 (US$7640). 74% of the loans cost borrowers less than RMB 100 (US$15).

74% of the individual borrowers were in jobs lower paid than white-collars. Loan delinquency rate in 2017 was 0.64%, up from 0.32% for the previous year.

The total outstanding loan balance and assets increased by 55% and 57%, respectively.

Some 50 partnering financial institutions accounted for 75% of the total loan originations.

Total revenues increased by 175% in 2017, with net interest income and servicing fees increased by 140% and 305%, respectively.

Net profit increased by 261%. The average interest rate was down by 45 percent points in 2017.

The total number of registered customers increased by 214% in 2017 to over 60 million. They are located in more than 500 cities across China.

Source: WeBank, MyBank (Click to enlarge)

ChinaFintech – Ant Fortune Opens up AI Capabilities to AMCs

Ant Fortune, Ant’s online platform for investment products and services, announces to open a full suite of AI capabilities to asset management firms.

When launching Caifuhao platform in June 2017, Ant Fortune began to offer third-party mutual fund sellers some AI tools to improve performance such as the matching of customer needs and offerings.

Ant also provides third-party financial institutions a customer service bot, called Machine Intelligence Service Assistant (MISA).

Ant Fortune claims that these AI offerings have proven to be able to increase the operational efficiency of Caifuhao accounts by 70% and lower costs by 50%.

Ant Fortune platform has had some 27 mutual fund companies that have listed about 4000 publicly traded funds.

ChinaFintech – China’s First Licensed Consumer Credit Reporting Agency Opens for Business

Baihang Zhengxin Limited (百行征信有限公司), the state-backed consumer credit reporting agency officially opened for business on May 23rd. It is the first to obtain a license to operate a personal credit reporting business in China.

It will be mainly targeted at alternative lenders, particularly online lenders. Previously only China’s central bank maintained a credit information database, the Credit Reference Center, that has mainly been serving established traditional financial institutions while most of the online lenders don’t have access to.

The National Internet Finance Association of China (NIFA), a state-backed industry trade group, holds a 36% stake in Baihang. The eight companies that were approved by the central bank in 2015 to develop their own consumer credit scoring services, including tech giants such as Tencent and Alibaba’s fintech arm, each holds an 8% stake in it.

The eight member companies will reportedly share their data, technologies and other resources with Baihang.

Four of the eight backed by tech companies, Zhima Credit Management Ltd.Tencent Credit Ltd., Qian Hai Zheng Xin, and Kaola Zhengxin, had previously developed their own consumer credit scoring services based on to different extents alternative data generated from their own online services. It’s unknown to what extent they’d share their own data with Baihang.

The products and services provided by Baihang will include consumer credit reports, credit scores, and anti-fraud services.

Used Car Sales Platform Uxin Files for US IPO

Used car sales platform Uxin (优信) has filed wih the SEC to raise up to US$500 million in a NASDAQ IPO.

Established in 2011, Uxin connects car buyers to individual sellers and dealers and provides financing options to both car buyers and dealers by working with third-party financial services providers.

Uxin’s major revenue sources are fees from used car sales and auto loans, with a minority from sales of salvage cars and new cars, and short-term dealer inventory financing. The company plans to discontinue its new car sales business after selling their remaining new car inventory. It hadn’t turned a profit as of March 2018.

The revenue from auto loans as a percentage of the total revenue increased to 48% in 2017, up from 38% in 2016.

Source: Uxin

In 2017 the total number of used car loan transactions and the total amount of used car loans facilitated increased 113.6% and 110.7%, respectively, from the previous year. The total outstanding principal balance of loans for new cars accounted for 8.4% of the total outstanding principal balance of auto loans as of March 2018.

The company claims its used car sales platforms for individual car owners and dealers have 41% and 42% market shares, respectively, citing research reports from iResearch. Its major local competitors include Guazi.com.

In 2017, 45% of the total transactions and 60% of the GMV were generated between individuals.

It had established more than 670 physical service centers in more than 270 Chinese cities as of March 2018.

ChinaFintech — Xiaomi’s Finance Business

Xiaomi Finance, the online finance arm of smart device maker Xiaomi, accounted for 0.7% of Xiaomi’s total revenue, or RMB802 million, and 0.2% of its pre-tax net loss, or RMB83.6 million in 2017, respectively, according to its IPO filing. The total assets of Xiaomi Finance accounted for 14.1% of Xiaomi’s total in 2017.

Update: Xiaomi Finance accounted for 0.9% and 0.22% of Xiaomi’s revenue and pre-tax profits, respectively, but 13.55% of its total assets as of March 31st, 2018, according to its prospectus filed withThe China Securities Regulatory Commission (CSRC).

Xiaomi is restructuring its finance business that its stake in Xiaomi Finance will decrease to 40% after it completes.

Since 2015 Xiaomi Finance has added products and services in supply chain financing, consumer lending, payments, distribution of retail investment products and insurance.

Xiaomi provides consumer loans through mobile apps including Xiaomi Loans, Xiaomi Finance and Xiaomi Wallet. The loan receivables were RMB101 million, RMB1.6 billion, RMB8.1 billion as of the end of 2015, 2016 and 2017, respectively.

The consumer loan offerings include installment payment plans for the purchases of Xiaomi hardware products. Xiaomi Finance paid RMB 400,000, RMB 200,000 and RMB3.3 million to Xiaomi for hardware products sold through it in 2015, 2016 and 2017, respectively.

Leveraging the user data collected mainly from Xiaomi devices, Xiaomi Finance has developed proprietary consumer credit assessment and risk management systems. MIUI, the custom Android system pre-loaded in all Xiaomi connected devices, had 190 million monthly active users as of March 2018, according to Xiaomi’s filing. Xiaomi and Xiaomi Finance will continue to share their data with each other after restructuring.

Beijing Xiaomi Electronic Software, an affiliate of Xiaomi, has a minor stake in XWbank, a direct bank established in late 2016.

For the online payment and settlement services provided by Xiaomi Finance, Xiaomi pays fees to it. The amount was RMB40.3 million, RMB43.9 million and RMB49.9 million in 2015, 2016 and 2017, respectively.

Xiaomi Finance pays Xiaomi for online marketing services and other support services. It paid RMB9.7 million, RMB1.8 million and RMB70.8 million in 2015, 2016 and 2017, respectively, for online marketing services to Xiaomi.